Prices hit new Heights

Corrie M. Anders, EXAMINER REAL ESTATE EDITOR

Published 4:00 am, Sunday, November 16, 1997

1997-11-16 04:00:00 PDT SAN FRANCISCO -- The real estate market in Presidio Heights and Pacific Heights - two of San Francisco's most affluent neighborhoods - has been nothing short of spectacular during the past six month.

So much so that prices for some luxury homes in the two enclaves increased anywhere from $10,000 to $15,000 every seven days between May and the end of October, according to a new survey of residential values in The City.

They were among neighborhood leaders as widespread appreciation was reported throughout San Francisco under strong demand from buyers riding the coat tail of an extraordinarily strong Bay Area economy.

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Last month's roller coaster stock market put a slight crimp in some shoppers home-buying plans. Prior to the Wall Street turbulence, though, the Bay Area had its best six-month rally since the go-go years a decade ago, according to Home Values, a biannual survey conducted for the Examiner by Coldwell Banker Residential Real Estate.

In Presidio Heights, a neighborhood of elegant homes, the value of a four-bedroom, single-family detached home jumped to $1.95 million from $1.6 million six months earlier, the survey showed.

That represented a 21.9 percent increase for Presidio Heights, a neighborhood of elegant homes located next door to Pacific Heights.

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The appreciation rubbed off. The value of a three-bedroom, single-family detached home in Pacific Heights jumped 16.1 percent to $1.3 million from $1.12 million while a four-bedroom home rose an even 16 percent to 1.74 million to $1.5 million.

The high-flying gains for Presidio Heights and Pacific Heights homes in the $1 million to $2 million range was precipitated by an abundance of well-heeled buyers clamoring over a limited number of properties for sale, said Avram Goldman, a Coldwell Banker senior vice president.

Goldman said there were two to five offers for every house that sold in the two neighborhoods. Coldwell Banker real estate agent Naomi Glass, for example, represented a young, 30-something couple vying for a Pacific Heights home priced at $1,380,000.

"There were two offers and it went the first week at the full price," she said. Her clients got the home.

"Why are there so many buyers in that price range?" asked Goldman. "We have a new generation of millionaires" employed by private start-up firms that eventually went public via stock sales on Wall Street.

"A lot of people have made a lot of wealth over the last several years" in Silicon Valley's high-tech industry and the multimedia industry in San Francisco's SOMA District.

In addition, Goldman noted that a number of upscale buyers benefitted from fortuitous timing: They bought houses several years ago in a depressed market and sold in today's highly appreciating environment.

"They've done well on their homes and in their business, and they're moving up," he said.

Bill Lieber, a Pacific Bell employee, purchased his Pacific Heights home three years ago and now has the renovated property on the market for $1,450,000. He said he was "a little bit surprised" at how strong prices and demand have become.

"You hear these outrageous stories of people bidding homes up by 25 percent," said Lieber. His own home has attracted "a big crunch on interest" after going on the market a couple of weeks ago.

"It's nice to see," he said. "But it's a bit overwhelming. It seems like everyone in San Francisco has gone through my house."

The Bay Area's robust economy also is fueling strong appreciation in San Francisco's $300,000 to $500,000 neighborhoods - especially those with commuter links to high-tech jobs.

Bernal Heights, with its village-like ambiance and relatively down-to-earth price tags, saw the value of a three-bedroom, single-family home rise 17.9 percent to $395,000 from $335,000.

And the value of a three-bedroom, single-family home on Potrero Hill increased 12.7 percent to $400,000 from $355,000 six month earlier, the survey showed.

The buyers were young professional singles or couples

"with high incomes who want to live in The City," Goldman said. "They like Bernal Heights and Potrero Hill - which is really a very, very hot area. And the reason is that it is close to SOMA" with its happening night life and Media Gulch jobs. Potrero Hill also is close to the Caltrain station at Fourth and Townsend for "an easy commute to Silicon Valley," he said.

"Bernal Heights is the same sort of thing. It's a pretty hip area, close to the freeway, with nice little restaurants and shops," Goldman said. "And it's affordable."

In between the mansions and the bungalows, solidly middle and upper-middle class neighborhoods also showed significant appreciation.

Forest Hill had 10 percent gains for both three- and four-bedroom, single-family homes; Ashbury Heights was up 9.5 percent for a three-bedroom home and 11.9 percent for a four-bedroom home; the Marina District up 10.7 percent for a four-bedroom home, and Golden Gate Heights up 8.5 percent for a four-bedroom home.

Even condominiums, usually a distant second alternative to single-family homes for most buyers, showed appreciation muscle not seen since the late 1980s.

On Russian Hill, the value of a two-bedroom condo jumped 22.5 percent to $490,000 from $400,000 in April. Not far behind the condo leader was a 17.6 percent gain recorded on Telegraph Hill, where prices rose to $400,000 from $340,000; Nob Hill, up 15.4 percent to $808,500 from $700,000. Condos in Potrero Hill, Pacific Heights and the Upper Market also boasted double-digit gains.

While the April-to-October housing market was torrid, stock market fluctuations in mid-October scuttled a few home buying dreams, Goldman said.

Some transactions fell through because buyers "counted on stocks to fund their down payment," and some buyers were starting to display a "tiny bit more reluctance" to commit to the purchase, said Goldman.

"I don't want to give the impression that the market is slowing down because it's not," he said, but stock market uncertainty could portend a slowdown in the rapid escalation of housing prices.

"We might not see in the next six months the appreciation we've seen in this six months because of a little bit of nervousness and apprehension," Goldman said.

The Home Values survey was conducted Nov. 1.

A monthly feature of the Examiner Real Estate section, it monitors the values of homes in six regions: Alameda, Contra Costa, Santa Clara, San Francisco and San Mateo counties and the Marin County / North Bay area.

The survey in each area is conducted twice a year on a rotating basis. The survey doesn't report actual sales prices. Using appraisal techniques, sales prices and other market information, the survey tracks the value of three specific residences in each community: a two-bedroom, two-bath condominium; a three-bedroom, two-bath, single-family detached home and a four-bedroom, three-bath single-family detached home.

Each property is in the median-price range for the area and is typical of the kind of housing found there. The median means that half the homes sell for more and half for less.

Home Values figures aren't intended to represent the value of all homes in an area, but they are one general indicator of property values. Actual sales prices of specific homes can vary sharply, depending on local market conditions.&lt;

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